China’s ultra-speculative commodity markets have traditionally been territory where foreigners have feared to tread.

Recently, however, one contract has been gaining popularity—China’s yuan-denominated crude-oil futures, which launched in March to much fanfare. One reason: Investors seem to be betting that China and Iran will start doing more of their oil trade in yuan as the Trump administration’s November deadline for nations to cut Iranian oil imports looms closer. The yuan is still far from being a credible challenger...